U.S. sanctions move angers Iran, Russia sees threat to nuclear deal

(Reuters) - A breakthrough agreement to end the standoff over Iran's nuclear program appeared to face its first major difficulty on Friday with Russia warning that expanding a U.S. sanctions blacklist could seriously complicate the deal's implementation.

Russia, which, along with the United States, is among the six world powers that negotiated the November 24 interim accord with Tehran, echoed Iranian criticism that it violated the spirit of the deal and could "block things".

The United States on Thursday blacklisted additional companies and people under existing sanctions intended to prevent Iran from obtaining the capability to make nuclear weapons. Iran denies any such aims.

Diplomats said Iran, in what appeared to be a response, interrupted technical talks in Vienna with the six nations over how to implement the agreement, under which Tehran is to curb its atomic activities in return for limited sanctions easing.

The developments highlighted potential obstacles negotiators face in pressing ahead with efforts to resolve a decade-old dispute between the Islamic Republic and the West that has stirred fears of a new Middle East war.

Western diplomats said the inconclusive outcome of the December 9-12 expert-level discussions should not be seen as a sign that the deal hammered out nearly three weeks ago was in trouble.

But Deputy Foreign Minister Abbas Araqchi told Iran's semi-official Fars news agency in reaction to the U.S. decision that it was evaluating the situation and would "react accordingly", adding, "It is against the spirit of the Geneva deal."

Russia also made its concerns clear.

"The U.S. administration's decision goes against the spirit of this document," said Foreign Ministry spokeswoman Maria Zakharova, referring to the Geneva agreement between Iran and the United States, Russia, China, France, Britain and Germany.

"Widening American 'blacklists' could seriously complicate the fulfillment of the Geneva agreement, which proposes easing sanctions pressure."

In Washington, U.S. State Department spokeswoman Marie Harf said she did not think the blacklistings announced on Thursday had made the negotiations more difficult.

"No, I don't. I think it was always going to be very complicated," Harf told reporters, adding the United States had told Iranian officials in Vienna that more designations were coming.

DEAL OPPONENTS

Russia built Iran's first nuclear power plant and has much better ties with Tehran than Western states. It supported four rounds of U.N. Security Council sanctions aimed at reining in Tehran's nuclear program but has criticized the United States and Europe for imposing additional sanctions.

U.S. officials said the blacklisting move showed the Geneva deal "does not, and will not, interfere with our continued efforts to expose and disrupt those supporting Iran's nuclear program or seeking to evade our sanctions".

The new measure, the first such enforcement action since Geneva, targeted entities that are suspected of involvement in the proliferation of materials for weapons of mass destruction and trying to evade the current sanctions.

Some U.S. lawmakers want further sanctions on the Islamic state. But the administration of President Barack Obama has campaigned to hold off on new measures for now to create space for the diplomatic push to settle the nuclear dispute.

Iran's ambassador to France said expanding the blacklist played into the hands of those opposing the deal - including hardliners in Iran irked by the foreign policy shift and apprehensive that they are losing influence over Iran's most powerful man, Supreme Leader Ayatollah Ali Khamenei.

"This agreement has opponents both inside Iran and outside Iran," Ali Ahani told reporters at a meeting of business and political leaders in Monaco.

"We are determined to keep to our commitments, but we have to be sure that on the other side they are serious, and that we can show to our people that we can trust them and that the West is a viable partner."

"The contents of this accord are quite clear. It was decided not to add sanctions. This type of decision blocks things," added Ahani, speaking on behalf of Foreign Minister Mohammad Javad Zarif, who pulled out of the World Policy Conference after his mother was taken ill.

'NOT PANICKING'

The Geneva deal was designed to halt Iran's nuclear advances for six months to buy time for negotiations on a final settlement. Scope for diplomacy widened after Iran elected the pragmatic Hassan Rouhani as president in June. He had promised to reduce Tehran's isolation and win sanctions easing.

Under the agreement, Iran will restrain its atomic activities in return for some easing of the international sanctions that have battered the major oil producer's economy.

But one diplomat said the Iranian delegation in Vienna suddenly announced late on Thursday - hours after Washington made its blacklisting decision public - that it had received instructions to return to Tehran: "It was quite unexpected."

An EU diplomat said he did not believe the decision was linked to the issues under discussion in Vienna, but rather "their reaction to moves in the U.S. on sanctions".

The hope was that it was a temporary problem: "The Iranians have been committed to making this work. We are not panicking."

Iranian officials were not available for comment.

U.S. Secretary of State John Kerry said he expected the implementation talks to resume in the coming days. "We have been hard at it in Vienna ... we are making progress but I think that they're at a point in those talks where folks feel a need to consult and take a moment," he said during a visit to Israel.

"There is every expectation that the talks are going to continue in the next few days and that we will proceed to the full implementation of that plan."

A spokesman for EU foreign policy chief Catherine Ashton, who coordinates the discussions with Iran, also said they were expected to resume soon.

"After four days of lengthy and detailed talks, reflecting the complexity of the technical issues discussed, it became clear that further work is needed," Michael Mann said.